United States

Gains made early in the session, driven by news from Chinese media that President Xi and President Trump had spoken, sparked optimism for progress on a trade deal. However, this momentum was lost as a social media feud erupted between President Trump and Tesla CEO Elon Musk, causing Tesla’s shares to plummet by 14%. As a result, market sentiment weakened.

The S&P 500, which had come close to regaining the 6,000-point mark, fell 31 points, closing at 5,939, a loss of 0.53%. Ten out of eleven sectors ended lower, with the consumer discretionary and staples sectors suffering the most. Other sectors saw only marginal movements. The Dow Jones Industrial Average fell 0.25%, closing at 42,319, while the Nasdaq Composite dropped 162 points, closing at 19,298, a 0.83% decline.

The Ministry of Foreign Affairs in China reported that President Trump had initiated a phone call with President Xi, which was described as “very good” by Trump. The initial optimism following the announcement quickly faded when President Trump suggested that he might pull government contracts from Musk after he comments from the previous day, prompting Musk to respond that Trump only won the election because of him. This exchange caused Tesla’s shares to dive by 14.26%, a $47.35 drop to close at $284.70. After the market closed, Musk escalated matters further by announcing that SpaceX would immediately decommission its Dragon spacecraft, which had saved two NASA astronauts earlier in the year. In after-market trading, Tesla shares fell an additional 2.9%.

In stock news, Costco reported disappointing sales growth for May, missing analysts’ expectations. As a result, Costco’s shares fell by 3.89%. Fellow retailer Walmart also saw a decline, dropping 1.40%. Sporting apparel company Lululemon reported better-than-expected results but lowered its guidance for the next quarter, citing a “dynamic macro environment.” Shares of Lululemon dropped 20.5% in after-hours trading.

Copper and gold miner Freeport-McMoRan continued its upward trend, adding 2.03%. Over the last four trading sessions, shares of the miner have risen by 8%.

In economic data, weekly jobless claims rose as the market awaited the May non-farm payrolls report. Analysts expect an increase of 125,000 jobs, compared to 177,000 in April, with the unemployment rate remaining steady at 4.20%. Additionally, Procter & Gamble announced it would cut 6% of its workforce, equivalent to about 7,000 jobs, over the next two years.

Bond yields rose by 4 basis points on the 10-year Treasury, reaching 4.39%, while the US dollar remained stable.

Europe

As expected, the European Central Bank (ECB) cut its benchmark rate to 2.00%, marking its eighth rate reduction in this cycle. The ECB hinted at a pause in future rate cuts, as President Christine Lagarde’s comments suggested that an anticipated rate cut in July was now unlikely. The Euro Stoxx 600 edged up by 0.16%, closing at 551.88, with mixed sector performance. In the UK, the FTSE 100 rose by 0.1% to 8,811, led by industrial miners benefiting from stronger copper prices.

European banks saw gains following the rate cut, with Banco Santander up 1.43% and UniCredit rising by 2.23%. On the other hand, British banks remained stable. Copper stocks surged, with Antofagasta leading the way, adding 5.27%. Anglo American and Glencore also saw increases of 2.69% and 1.15%, respectively, as mining stocks drew investor attention.

Boot maker Dr. Martens saw a significant jump, soaring over 25% after releasing its full-year results and unveiling a new strategy.

Bond yields moved higher as traders adjusted their expectations for future interest rate cuts in Europe. The 2-year German bond yield rose by 8 basis points to 1.86%, while the 10-year yield increased by 6 basis points to 2.58%. In the UK, rates remained stable. The EUR/USD currency pair also held steady, trading at 1.144.

*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.

Commodities

Copper surged by US$118 to close at US$9,740 per tonne on the LME, marking a 1.2% increase and reaching a two-month high. This rise comes as stockpiles in London continue to decline, with UK warehouse inventories at their lowest level since July 2023. Iron ore also saw a boost following the US/China leaders’ phone call, with the July futures contract closing at US$95.70 in New York, a gain of 0.48%. In Asian trade, iron ore had dipped again, bottoming out at US$94.05 before rebounding.

Oil prices were higher, influenced by the phone call between the leaders, with WTI crude adding 0.83%, closing at US$63.37. Brent crude rose by 45 cents, settling at US$65.31. Additional talks scheduled between trade officials in China and the US contributed to increased market optimism. There was also news of direct talks between Canada and the US regarding tariffs.

Gold saw a marginal decline, dropping 0.60% to US$3,352, with a US$20 drop. The market appears to be consolidating at these higher levels, supported by reports of increased gold purchases by central banks and predictions of further acquisitions. Analysts do not foresee a significant change in the trend of moving away from the US dollar in the near term. Silver, however, gained 3.32%, rising to US$35.65, breaking through resistance to reach its highest level since 2012. The record high for silver was US$37.66 in 2011.

Bitcoin fell 4%, closing at US$100,504. Traders speculated that the ongoing Musk/Trump feud, alongside the varying US policy, could impact future price movements for cryptocurrencies.

Economic Calendar

EU:

• Retail Sales (April)

US:

• Non-Farm Payrolls (May)